Navigant Research Blog

Are Corporate Clean Energy Initiatives Real?

— December 10, 2014

In November, Amazon made a commitment to power its infrastructure with 100% renewable energy over the long term.  Among tech companies, Amazon is late to the game in announcing its sustainability goal; Apple, Google, and Facebook had already released similar pledges over the past few years.  Although cloud computing is more environmentally friendly than previous computing technologies, according to Amazon, a “significant amount of unused server capacity and wasted energy consumption” still occurs when powering data center infrastructure.

Since 2008, businesses and corporations around the world have begun to more actively pursue sustainability initiatives.  Between 1992 and 2012, the number of corporations worldwide issuing corporate social responsibility (CSR) reports jumped from 26 to around 7,500.

Fortune 500 Leads the Way

Many of the leaders in corporate sustainability are part of the Fortune 500.  In 2013, 43% of Fortune 500 companies had established goals for greenhouse gas (GHG) reductions, energy efficiency, renewable energy, or some combination of the three, and 60% of Fortune 100 companies had set sustainability targets.  Although large corporations have made progress in establishing sustainability initiatives, only 75 of the Fortune 500 had specific energy efficiency targets in place by 2013.  GHG reduction targets made up the greatest share of climate and energy initiatives.

Companies with long-standing commitments to reducing energy use have already seen energy and dollar savings from these initiatives.  Walmart, for example, laid out plans in 2013 to save $1 billion globally per year through energy efficiency and renewable energy programs.  The company has a long-term aspirational goal to achieve 100% renewable energy.  In the shorter term, by the end of 2020, Walmart aims to reduce emissions intensity by 30% from 2010 levels and produce or procure 7 billion kWh of renewable energy worldwide.

The Trouble with Long Term

Kohl’s is another leader in corporate sustainability efforts.  It has been implementing green building methods since 2005, and it had 432 LEED-certified stores as of June 2014, representing a full 37% of the company’s 1,160 stores across the United States.  The 432 stores represent a total floor space of 35,616,240 square feet.  Kohl’s plans to reduce absolute emissions and emissions intensity on a per-square-foot basis by 20%, both by 2020, compared to 2010 levels.

Although the growing prevalence of CSR and sustainability goals is encouraging, broad long-term goals have raised concern from some environmental groups.  Setting goals without defined milestones makes it more difficult to hold companies accountable for the clean energy initiatives they have in place.  Many companies, Amazon included, have not specified a roadmap to achieve their energy goals – an obvious next step to ensure those goals are achieved.  Publicly committing to a clean energy future is only a first step.

 

Improved LED Christmas Lights Decorate the Tree

— December 9, 2014

As people around the globe dig through their closets this holiday season to locate strings of lights to decorate their trees and houses, a portion of those looking to decorate will decide that it is time to purchase new lights.  When those people arrive at stores or check out online retailers, they will find a wider selection of LED options than ever before.  Most of the traditional incandescent styles of string lights have been replaced with LEDs.  The question is: Will the average consumer make the upgrade?

One of the most important filters is quality.  A consumer may be interested in purchasing LEDs, but he or she first needs to know that the product will meet expectations.  Though LED decorative string lights have been available for a number of years, their quality has not always been up to par.  Early models were often quite dim.  For bare white lights, that dimness was not a large concern because the small points of light were still easily visible.  For styles with larger bulbs, and especially colored bulbs, the lack of brightness was a significant downside, as the lights hardly looked to be illuminated in any but the darkest conditions.  This shortcoming has been overcome.  Today’s LED string lights are every bit as bright as their incandescent predecessors.

On Flicker

A second quality issue that affected bare white lights was flicker.  Because LED chips can respond so quickly to changes in electrical current, alternating current (AC) power can actually cause them to turn on and off at the frequency of that power (50 to 60 times per second).  The blinking that results may not be noticeable when staring directly toward an LED light, but movement of the head or eyes can allow peripheral vision to detect the flicker.  When this occurs from dozens or hundreds of individual string lights, the effect can ruin the cheeriest holiday party.

Again, though, LED string lights on the market today have corrected this problem through improved driver technology, eliminating any perceptible flicker.  Indeed, depending on the style of light, LEDs can be virtually indistinguishable from their incandescent counterparts.

As with LED lighting for commercial and residential applications, prices for LED string lights have fallen greatly in recent years, but the LED version can still be 2 to 5 times as expensive as the comparable incandescent option.  While this range of price difference is similar to the premium paid for residential or commercial LED products, the business case for holiday lights may seem worse.

White Light, No Heat

In our recently published report, Energy Efficient Lighting for Commercial Markets, Navigant Research describes the various trends that are pushing the adoption of LED lighting and shows that upfront price parity is not a prerequisite to widespread adoption, especially if the payback period from energy savings is relatively short.  However, commercial lights operate for many more hours compared to decorative string lights, which may only be on for 6 to 8 hours per day, and for one month out of the year.

Other considerations will certainly influence consumers’ decisions as well.  Environmentally-minded purchasers might like to know that their holiday lights aren’t consuming any more electricity than necessary.  Those who are safety-conscious would surely appreciate that the lights resting on the dry needles of the trees inside their homes generate as little heat as possible, as LEDs do.  Overall, not every consumer will be ready to upgrade to LED string lights this year ‑ but the barriers are dropping fast and the future of Christmas decorations is almost certainly digital.

 

Using Applications to Empower Smart Cities

— December 9, 2014

In late November, the crowdsourced smartphone app Waze released a stunning visualization that showed the traffic flowing through New York City on a recent September day.  Resembling blood flow though a body, cars move through the arteries and veins of city streets and highways, slowed by both collisions and general congestion.  Waze collects data via smartphone owners that allow their location (and speed and direction) to be captured and aggregated, providing real-time information on traffic in a city.  When using Waze, drivers can be alerted to new incidents like accidents and police on the road, and the app can even suggest new routes for a faster ride.

Crowdsourcing apps like Waze, ridesharing apps like Ridejoy, and home control apps like Nest may also be a boon to some of the smart city initiatives being developed and planned worldwide.  Numerous cities in the world are adapting IT for their infrastructure and streamlining operations for their departments.  Navigant Research’s report Navigant Research Leaderboard Report: Smart City Suppliers identifies the promising companies that have demonstrated advanced approaches and penetration in this sector.  Most smart city initiatives begin with public transportation and traffic monitoring, as they are critical services for citizens, and promote commerce as well.

Short on Cash

There’s a basic challenge for cities that want to pursue programs like these, though: limited municipal funding.  In the first world, or in a few examples in the developing world, cities have signed multimillion-dollar contracts, paying large IT and equipment companies for equipment and consulting services for smart city initiatives.  These large price tags limit the adoption of (large) smart city programs in the developing world and in smaller cities and towns.  Crowdsource apps could provide a solution.

If the data from crowdsourced apps like Waze could be shared with municipal agencies, data limitations would virtually disappear.  Instead of paying millions for a full service solution, a city could hire a cadre of data analysts to examine the trends in traffic, identify collision hot spots, and use the aggregated data for long-term traffic planning, supplanting expensive traffic studies.  One example of an interesting use of this kind of data is New York University’s (NYU’s) visualization of taxi rides in New York City.

Taxi Confidential

Using data from the Taxi and Limousine Commission, NYU researchers created a rich queryable database where taxi demand is revealed visually, and the impact of major disruptive events like Hurricanes Sandy and Irene on taxi rides can be understood (namely, that few taxis ventured into the power-less regions of lower Manhattan).  MIT has, in turn, developed an interactive website using the taxi data to demonstrate the value of ridesharing.   The academic insight has yet to be used for city policy, but as the analysis improves, such applications will surely follow.

Certainly, there are obstacles with this approach.  The first is privacy.  Aggregated urban mobility data can be anonymized.  Yet, the idea of governments gaining access to individual citizens’ whereabouts, regardless of the source of the data, may make a fair number of people uncomfortable.  Open questions prevail: Could mobility data be used for forensic purposes?  Since Waze is owned by Google, what other information could be associated and shared?  These questions and many others will have to be addressed through real deployment.  As has been seen through companies like Uber, which is now causing taxi medallion prices to fall, disruptive technologies can shake up the status quo.  City governments have not traditionally been the locus of innovation, but the smartphone in your pocket may change that in the near future.

 

Utilities Could Accelerate the E-Truck Market

— December 9, 2014

In November, a group of 70 U.S. utilities announced a major commitment to buying plug-in vehicles (PEVs), an initiative that could have a major impact on the plug-in truck market in the United States.  At a White House ceremony, a group of investor-owned utility executives committed to spending 5% of their annual fleet budgets on PEVs.  This reportedly will total around $50 million annually spent on PEVs.

It’s no surprise that utilities support the use of PEVs in their fleets, since it allows them to shift fuel budgets from petroleum to their own power.  But the reality of utility adoption of PEVs is that, while a handful of very forward-looking utilities, such as Pacific Gas & Electric and Florida Power & Light, have been fairly aggressive about integrating PEVs into their fleets, many others have tried one or two or have been looking to see the results of trials from the first movers.

Trucks, Not Cars

With this joint commitment, utilities can have a much bigger impact on the U.S. market for PEVs. But the best way to spend the money to really move the market for PEVs forward will be to spend it on trucks, not on passenger cars.  Passenger cars offer more bang for the buck, and create fewer headaches since passenger car PEVs have already been proven in the consumer market.  But for that reason, there is considerably less need for utility purchases to push the market.  $50 million would buy around 1,700 Nissan LEAFs, for example.  That is less than 2.0% of the total PEVs that Navigant Research projects to be sold in the United States in 2014 in its report, Electric Vehicle Market Forecasts.

If utilities invest in electric trucks, they could have a much bigger impact.  Plug-in trucks are still in the pilot, demonstration or very early commercial stage, as discussed in Navigant Research’s report, Hybrid and Electric Trucks.  This market suffers from low overall volumes and a splintered market, with many small niches to fill, including urban delivery vans, bucket trucks, service vehicles, and suburban or long-distance delivery.  One reason so many e-truck companies come and go is the challenge of achieving sufficient volume to bring down costs through economies of scale.  If utilities team up to place larger orders for plug-in trucks, they can have a real impact on the market.

Market Maker

For example, $50 million could buy around 250 plug-in bucket trucks with electric power takeoff, one of the more promising applications for plug-in trucks.  While that number may seem small, companies targeting this space are currently seeing orders in the tens – and these are still largely supported by government funding.  Whatever the application, a combined effort to place larger orders for plug-in trucks could have a major impact on this still-struggling market – and  could pay off for utilities that will benefit from using more fuel efficient trucks should this market succeed.

 

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